Porter's 5 Forces Model

Porter 's 5 Forces Model

Threats of new entrants

-This threat can be perceived to be low as the airline industry requires high capital investment and this will create a significant barrier for the possible new entrants.

-Brand awareness is also critical for an airline company.With the long-established brand of AirAsia,(10 years since 2002),consumers will always choose the product or service they trust.

-Government legislation also playing an important part in Malaysia airline company.The government link company Malaysian Airlines System(MAS) has been under the protection of Malaysia government.This has possess the threats not only to the new entrants but also AirAsia itself.

Threats of substitutes

-Air travel would be the most convenient service for the Asians as the Asian region being so vast and the geographical make-up.In addition,in certain countries where the border control is incredibly bureaucratic had made flying the most appropriate way.With this issue,the threats can be regarded as low.

Bargaining power of suppliers

-The bargaining power of the suppliers is considerably high as there are only two major suppliers in the airline industry which are Airbus and Boeing.However,this is countered by the recent global crisis making a huge barriers for new entrants enter into this market and reduced the frequency of upgrading of planes for the immediate future. Both suppliers are providing almost the same standard and quality of aircrafts hence making the switching cost of AirAsia to be low.

Bargaining power of buyers

-The switching cost for the buyers is low and there are plenty of choices in the existing airline market making the power of the buyers to be high.Moreover,the customers nowadays had become more and more sophisticated and this is further enhanced by the availability of internet and mobile technology.

Intensity of rivalry

-Airasia stands a better chance to survive in this gloomy market as its no-frills basis of competition is highly valued by the price-sensitive customers.However,this can be easily imitated by its competitors by having the operating cost under control and subsequently lead to an 'unrealistic' price war.

References

-www.freeonlineresearchpapers.com

-www.essayforstudents.com

-www.termpaperwarehouse.com

-Michael E. Porter's Five Forces